A transaction that increases an asset and decreases a liability must also affect one or more other accounts.

Question

Quizplus · Accepted Answer

This statement is true because every transaction in accounting involves at least two accounts, and the accounting equation (Assets = Liabilities + Owner's Equity) must remain in balance after each transaction. Therefore, if an asset account is increased and a liability account is decreased, there must be an equal and opposite effect on another account(s) to ensure that the equation remains in balance.

A Transaction That Increases an Asset and Decreases a Liability